Buying mortgage leads in Canada: what to fix before you pay for one

Short answer: buying mortgage leads only pays when your practice can answer a new lead within minutes, follow up for weeks, and keep a signed client from falling through. If any of those three is shaky, more leads mostly buy you more work. Fix those first, then decide which leads, if any, are worth paying for.

Most of the advice you'll hear on this comes from people who sell leads. That isn't a criticism, it's an incentive: their answer to a slow month is always more leads. This is the other half of the conversation.

Why I never bought leads. When I was a licensed mortgage agent, I never bought them. My co-workers did, and I watched how hard they had to work to earn a client's trust. That client is in a time crunch, in the middle of financing the biggest purchase of their life, and it's already emotional. Now a stranger calls, with no history with them or their situation, and asks to be trusted, while every other agent who bought the same lead calls offering a "second opinion". The client is getting a billion opinions, and it's not a fun place to be, for them or for the agent. We all sell the same product; what sets one agent apart is what we know, and a bought lead gives you no way to show it, so the client often goes with whoever overpromises to get a signature. Spend that money on growing your authority instead, so clients seek you out because they know you're the right person for their situation. Arthur Smelyansky

What you're actually buying

A mortgage lead is a person who filled in a form somewhere: a rate comparison site, a social ad, a "see what you qualify for" page. What changes between lead types is who else gets the same person, and how fresh they are when they reach you.

Whatever you buy, ask the seller three questions before you pay: how many other agents get the same person, how old the lead is when it reaches you, and exactly what the person agreed to when they filled in the form. The last one matters more in Canada than most sellers admit.

The math that decides whether a lead pays

You don't need an industry benchmark. You need three of your own numbers:

1. What you take home per funded deal. For example, if the lender pays 0.9% of the mortgage and your brokerage split is 80/20, a $600,000 GTA condo financed at 95% works out to roughly $4,100 for you. A $1.1 million house with the minimum down payment works out to roughly $7,300.
2. Your funded rate on bought leads. Out of every 100 leads you buy, how many fund.
3. What each lead costs you.

Then one line of arithmetic: cost per lead ÷ funded rate = what each funded client costs you in leads. Say you pay $40 a lead and 1 in 40 funds (a funded rate of 0.025). Each funded client costs you $1,600 in leads, before your time and other costs. Against $4,100 of take-home, that can work. At 1 in 100, it's $4,000, and you're close to working for free.

Both numbers matter, and the one you control is your funded rate. That's mostly decided by what happens in the first hour and the first few weeks after the lead arrives.

Speed decides more than the source

The best-known research on this is a 2011 Harvard Business Review study of 1.25 million online leads at 42 companies. Firms that tried to reach a lead within an hour were nearly seven times as likely to have a meaningful conversation with the decision-maker as firms that waited even an hour longer. Compared with firms that waited a day or more, they were more than 60 times as likely.

Now picture your Tuesday. You're across the table from a couple going through their pre-approval. Your phone buzzes: a lead you paid for. You can interrupt the people in front of you, or let it ring and call back in two hours. On a shared lead, another agent has already called by then.

That isn't a discipline problem. It's a capacity problem. One person can't be in the meeting and on the phone at the same time.

The question to ask first: what's your Capacity Gap?

Here's the test. If your leads doubled tomorrow, would your funded deals double, or just your workload?

Your Capacity Gap is the difference between how much business you want to handle and how much your practice can actually handle right now. When the gap is wide, more leads don't fill it. They pour into the same calendar, the same inbox and the same you, and more of them go cold.

Most agents don't run out of buyers first. They run out of hours: callbacks, document chasing, lender conditions, reminders, renewals. Buying leads adds to that list before it adds to your income.

Five things to fix before you buy another lead

1. Answer every new enquiry in minutes, even when you're with a client

A missed call should get a text back right away ("Sorry I missed you, I'm with a client. When's a good time today?") and a call back as soon as you're free. A web enquiry should get an instant, personal reply with a link to book. None of this should need you to leave your meeting.

2. Follow up for weeks, not days

A buyer who isn't ready this week can be ready in two months. Most bought leads get two calls and then silence. A simple sequence of useful texts and emails over six to eight weeks, written in your voice and approved by your compliance desk, keeps you in the conversation without you having to remember.

3. Confirm and remind every appointment

A consultation that doesn't happen costs you the lead and the hour. Confirm right after booking, remind the day before and an hour before, and make rescheduling one tap instead of a phone call.

4. Chase documents and conditions without chasing people

Deals rarely die in the first meeting. They die waiting on a job letter, a missing Notice of Assessment, or a lender condition nobody followed up on. A document request that reminds itself, with a clear list of what's still missing, protects the deals you've already won.

5. Work the clients you already have

Your past clients and upcoming renewals are leads you've already paid for. Reaching them before their lender does, and asking every client for a review and a referral, mostly costs organization, not money.

Fix these five, and a bought lead finally has somewhere to land.

The Canadian rules on bought leads

This is where lead sellers tend to go quiet. Check these three with your brokerage's compliance desk before you contact anyone you've bought:

• Texts and emails (CASL). Buying a list doesn't buy you consent. The Privacy Commissioner's CASL guidance says that when you acquire a list, you need to be able to show the people on it consented to hear from you.
• Phone calls (the National Do Not Call List). Telemarketing calls to numbers on the National DNCL need the person's express consent unless an exemption applies under the CRTC's telemarketing rules. Ask the seller exactly what the person agreed to.
• Your advertising. Anything sent under your name is your marketing, so it follows Ontario's rules for mortgage brokerages, including showing your brokerage's name and licence number (O. Reg. 188/08).

None of this makes buying leads illegal. It makes "what did this person agree to?" the first question instead of the last.

When buying leads does make sense

Once you answer in minutes, follow up for weeks and confirm every appointment, bought leads become a fair test instead of a gamble. Start small with one source. Track your closing rate on that source separately from your referrals, and give it a full follow-up cycle before you judge it. Keep the sources that pay for themselves at your take-home per deal, and drop the rest.

And if your calendar is already full from referrals and past clients, you don't need leads at all. You need the hours back.

There is also the route Arthur took: skip bought leads and put the money into authority. Answer the questions your clients actually ask, in public, so they arrive already trusting you instead of comparing you with four other agents. We're doing exactly that with our own business, with the numbers every week, on our building-in-public page.

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